Lithuanian insurers reported GWP of EUR 709.8 million in 2016, while growth within the entire insurance market was 10%. The amount of insurance premiums within the non-life insurance sector stood at EUR 463.1 million last year, an increase of 13.2% y-o-y, mostly driven by the motor insurance classes.

The life segment market grew by 4.6% y-o-y to EUR 246.7 million. "A positive contribution to the result of the life assurance sector stemmed from a record-high increase in the amount of single insurance premiums within the unit and index-linked insurance class, accounting for the largest share of the life assurance market".

"This was nearly in line with the Bank of Lithuania's early projection that the non-life insurance market would accelerate its growth rate, while the scenario for the development of the life assurance market was fulfilled far better", as the Central Bank annouced in a press release.

Following last year's one-tenth increase in terms of GWP, Bank of Lithuania forecasts that in 2017. the local market will grow less strongly, by about 6-7%. "Stronger development is projected for the non-life insurance market, while the life segment is pending a decline".

According to the forecasts of the Bank of Lithuania, the growth rate of the non-life segment, which accounts for two thirds of the entire insurance market, this year will slightly decline compared to 2016; "however, it is likely to account for 10-12%".

The year 2017 is not expected to be as favourable for the life assurance market as last one - this year, the amount of insurance premiums may decrease by 4-6%.

"Growth in the insurance sector will be ensured by the dynamic development of the non-life insurance sector. The non-life insurance market will benefit from the development of the entire economy and the resulting growth in domestic consumption and inflation. No significant structural changes in the insurance portfolio are expected; compulsory and commercial asset insurance products will continue dominating this market. Meanwhile the projections for life assurance are opposite: a decline is forecasted. Recent changes in the regulatory and taxation environment, the protracted low interest rate environment, which resulted in a decline in the guaranteed return on insurance products, as well as an unusual leap in premiums in the last month of 2016 that will determine a high comparable base, will be the reasons behind the projected negative market change", said Vytautas VALVONIS, Director of the Supervision Service of the Bank of Lithuania.

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